The Dhaka Stock Exchange Limited last week turned down the proposals of three companies to float initial public offering as its board of directors found the proposals either faulty or unfit for the current market situation.
The companies that approached the bourse for its opinion on floating IPOs are Unique Hotel and Resort Ltd, Energyprima Limited, and Shurwid Industries Ltd.
‘Based on the listing committee’s report, the DSE board decided that none of the IPO proposals were sound enough for getting a positive response,’ said a DSE director.
In its proposal submitted to the DSE, the sponsors of Unique Hotel and Resort Ltd, which had floated its IPO earlier under the currently suspended book-building system, said the company would bring down the indicative price of the issue to Tk 135 by refunding Tk 50 to the shareholders. The indicative price of the issue is now Tk 185 with a face value of Tk 10.
‘It cited the example of MJL Bangladesh Ltd and said it would also like to go through the same procedure,’ the DSE director said.
‘The DSE board decided to sit with the Securities and Exchange Commission along with the representatives of the company to discuss the issue,’ he added.
The DSE board in its meeting last week decided to reject for the time being a proposal of Energyprima Limited for making an IPO as the board found the proposed price of the issue too high and the proposal lacking sufficient data.
In the proposal, Energyprima, an electricity generating company, stated that it had raised a capital of Tk 103 crore in 2010 by issuing placement shares and Tk 11 crore in 2011. ‘In that case, the earning per share of the company should be changed. But, the company did not provide that information,’ the DSE director said.
In the latest audited report submitted by the company, as on December 31, 2010, its NAV is Tk 27.16 per share and the earning per share is Tk 6.37. Its authorised capital is Tk 500 crore and the pre-IPO paid-up capital is Tk 118.6 crore.
The Energyprima proposed that it would float 3.14 crore ordinary shares at an issue price of Tk 95, comprising a face value of Tk 10 and a premium of Tk 85.
Energyprima estimated that the aggregate proceeds from the IPO would be approximately Tk 298.30 crore. Of the amount, Tk 204 crore would be used for loan repayment, Tk 84.3 crore for production facility development, and Tk 10 crore would be added to its working capital.
‘We asked for the updated financial statement from the company before giving any final decision. The board also found the issue over-priced and decided that the issue price should not be more than Tk 87,’ the director said.
The DSE board also rejected another IPO proposal, made by Shurwid Industries Ltd, as it decided that it would be too early for the company to float shares.
The company proposed to issue 1.40 crore ordinary shares at a face value of Tk 10 each. The authorised capital of the company is Tk 50 crore and the pre-IPO paid-up capital is Tk 28.50 crore.
According to the IPO prospectus of Shurwid Industries, the proceeds from the IPO would be used for repayment of an outstanding loan of Tk 10.69 crore and Tk 2.29 crore would be added to its working capital.
‘The company said it would repay loans from the IPO proceeds but it had raised Tk 24 crore earlier through placement shares, yet it had not paid back the loans at that time,’ the DSE director said.
As per the audited report dated September 30, 2010, the NAV of the company is Tk 12.40 per share and the earning per share is Tk 0.27.
-With New Age input
